(Bloomberg) — Epic Games Inc. failed again to force Apple Inc. to put Fortnite back in its App Store while the game developer pursues its antitrust claims against the iPhone maker.
A federal judge in Oakland, California, on Friday rejected Epic’s bid for a preliminary injunction that would have required Apple to reinstate the battle royale video game in the App Store — and allowed Epic to use its own payment option. Apple had removed Fortnite in August after Epic set up a direct-pay option for in-game purchases that circumvented Apple’s pay system.
It’s Epic’s second setback in its lawsuit alleging that Apple runs its App Store as an illegal monopoly because developers are barred from making their iPhone and iPad apps available through their own websites. Instead, Apple allows only downloads and payments through the App Store, and takes 30% of the purchase price. The case is now headed for trial next year.
What Bloomberg Intelligence Says
Epic’s antitrust lawsuit threatens the billions of dollars in revenue the App Store generates.
— Jennifer Rie, Senior Litigation Analyst
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While Epic isn’t seeking monetary damages, it’s asking for an order enjoining Apple’s rules and opening iOS devices to rival app distributors and payment systems, which could substantially curb App Store revenue, Rie said.
In a consolation for Epic, the judge stuck with her earlier ruling that Apple can’t cut Epic’s Unreal Engine from its developers’ tool program because the software program that is used by third-party developers isn’t part of the antitrust fight.
Behind the Apple Versus Fortnite App Store Battle: QuickTake
U.S. District Judge Yvonne Gonzalez Rogers said in her ruling that she was unwilling to tilt the playing field in favor of either side because of the novelty and the magnitude of the issues raised in the lawsuit concerning competition in digital marketplaces.
“This matter presents questions at the frontier edges of antitrust law in the United States,” Rogers said. “Simply put, no analogous authority exists. The questions and issues raised in this litigation concern novel and innovative business practices in the technology market that have not otherwise been the subject of antitrust litigation.”
The judge reiterated her position that Epic’s predicament is of its own making because it breached its contract with Apple by inserting a hotfix in Fortnite to circumvent Apple’s pay system. Epic “flatly” rejected the judge’s proposal that, if Epic put Fortnite back on Apple without the hotfix, Apple’s 30% take of in-game purchases would be placed in an escrow account until the case is decided at trial, according to the ruling.
“Epic Games is grateful that Apple will continue to be barred from retaliating against Unreal Engine and our game development customers as the litigation continues,” a company spokesman said. “We will continue to develop for iOS and Mac under the court’s protection and we will pursue all avenues to end Apple’s anti-competitive behavior.”
Apple denies running its App Store as a monopoly and contends that it faces fierce competition in every market in which it operates, including gaming.
“We’re grateful the court recognized that Epic’s actions were not in the best interests of its own customers and that any problems they may have encountered were of their own making when they breached their agreement,” Apple said in a statement.
Apple has said that Epic Chief Executive Officer Tim Sweeney sought a “side” deal seeking an exclusive storefront for Fortnite, a move that Apple executives argued would fundamentally upend how the App Store works. Sweeney maintains he wasn’t asking for special treatment but for Apple to make the same option available to all developers.
Unreal Engine is a suite of software used by developers to build 3-D games and other products. Cutting off Epic from Apple’s iOS and Mac developer tools would mean the gaming company can no longer distribute Unreal Engine to other developers, Epic has said. Microsoft Corp., which makes the Xbox, uses the technology for games developed for consoles, PCs and mobile devices, and is backing Epic in court.
The case is Epic Games Inc. v. Apple Inc., 20-cv-05640, U.S. District Court, Northern District of California (Oakland).
(Updates with judge’s reasoning in sixth paragraph.)
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